Banking sector leads Dubai bourse rise

The banking sector led the Dubai bourse up yesterday amid renewed speculation over positive news about some listed companies, but turnover was low as real estate and construction stocks remained stable.

The Dubai Financial Market rose for a second session running and the upward movement may continue until the end of the week as speculators are predicting surprises in the results of market heavyweights – in particular Emaar, DIB and Emirates NBD.

The general index added 14.17 points, or 0.86 per cent, and closed at 1,660.97. The market opened in negative territory but bounced up quickly amid surprise movements in DIB on increasing rumours in the market about its results. The stock was the day's top gainer, adding 5.91 per cent to close at Dh2.33. DIB became very active and attracted good volumes on generally low turnover.

Heavyweight Emirates NBD advanced by 0.8 per cent to Dh2.52 on low turnover. The upward movement in banking stocks pushed the index up while bellwether Emaar remained stable and closed 0.93 per cent up at Dh3.27. Arabtec advanced slightly to Dh2.28.

"The main mover on the DFM yesterday was the banking sector. Heavyweights DIB and Emirates NBD moved at the beginning of the session and gave a positive trend in other stocks," said Hosam Al Husseini, Head of Brokerage at Emaar Financial Services.

"The market took a negative hit from downturns in the global markets at the beginning of the session but the positive trend in banking stocks succeeded in changing the direction and there was some buying interest in selected stocks in anticipation that they would announce positive results."

Turnover, however, remained low with 169 million shares worth Dh263.7 million changing hands. Emaar continued to lead the market but the concentration on the stock seen during the previous few sessions started to ease as other stocks, including DFM, DIB, Tabreed, DSI and Aramex, attracted considerable percentages of the turnover.

"The market continued its bounce but turnover is still low so expectations of a rally are limited," said Al Husseini. "This bounce may end soon as institutions and high-net-worth investors are still staying away from the market."

Taimur Saadat, Head of Technical Analysis at Arab Capital Markets, agreed that the low turnover was casting doubts about the rise in the market continuing. "We expect the DFM to remain range-bound during the coming few sessions with some fluctuations up and down. The leading stock Emaar is holding strong but the low trade volumes are worrying and this is one of the main reasons for the absence of strong institutional investors."

He predicted that DIB and Emirates NBD would remain bullish and would support the DFM in the coming sessions.

"However this move will be limited and the index will fluctuate three to four per cent up and down during the coming month."

Saadat said he expected Emaar to move up slightly to Dh3.31 while Tabreed, UPP and Shuaa might witness strong rallies in the near future.

"Ajman Bank, DSI and Gulfnav look weak and may drop. However their impact on the DFM index will be limited as the market heavyweights are stable and strong," he said.

Speculation increases on small cap stocks

Speculative targeting of small cap stocks, especially Tabreed and Shuaa Capital, increased yesterday as positive news about the two companies emerged.

Tabreed announced that it planned to participate in the capital increase planned by Tabreed Saudi Arabia, in which the company owns a 25 per cent stake. The announcement came after increasing rumours in the market about such a move, which would maintain the level of Tabreed's stake in the Saudi affiliate.

Tabreed was the second top gainer as it rose by 4.35 per cent to Dh0.72.

Shuaa ended the session in negative territory at Dh1.26 after it rallied to Dh1.33 during intraday trading. Officials said the firm would report profits by the end of 2010 after two years of losses.

"The sudden injection of some liquidity in the market shows that speculators are holding large amounts of cash outside the market and are waiting for any chance for bargain hunting and quick profit booking," said Hosam Al Husseini.

Market looks strong

The DFM looks strong and has been moving in a narrow range for the past few sessions, but some institutional investors signalled that they expect a further drop in selected stocks as they embarked on short-selling deals.

Well-informed sources told Emirates Business that institutions started to go short in the market as they are expecting a new downturn within the coming two months. They are targeting leading active stocks.

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